Wednesday, June 21, 2017

540,000 fewer people in New Jersey will have health insurance by 2026 under the American Health Care Act (AHCA) than under current law, according to an updated analysis by Raymond Castro of New Jersey Policy Perspective. The update takes into account the May 24 cost estimate by the Congressional Budget Office (CBO) of the amended AHCA that passed the House on May 4.

Should the AHCA become law, NJPP forecasts:

The state uninsurance rate would increase by 50%, from 9.8% to 14.7% in 2026.

The uninsurance rate would double in Rodney Frelinghuysen's Congressional district, and more than double in Tom MacArthur's.

Almost all of the 562,000 New Jerseyans covered by the ACA Medicaid expansion would lose Medicaid coverage, and about two thirds of them would remain uninsured.

About one in ten New Jersey adults would lose Medicaid coverage.

The state would lose $28 billion in federal funding over ten years -- $21 billion in Medicaid funding, and $7 billion in reduced Marketplace subsidies.

The wealthiest 5 percent of NJ households would receive $13 billion in tax cuts over 10 years.

About 100,000 New Jerseyans would lose coverage in the individual market through reduction in subsidies for premiums and out-of-pocket costs.

A state uninsured rate higher than pre-ACA

NJPP forecasts that under the AHCA the uninsured rate would be higher in 2026 (14.7%) than in the 2013, the year prior to full ACA enactment (13%), in part because 172,000 people were covered by NJ FamilyCare under pre-ACA federal waivers that have since expired.

The uninsured rate would double among constituents of the two New Jersey Congressmen who voted for ACA passage, according to the report. In NJ-11, Rodney Frelinghuysen's district, the ranks of the uninsured would double, to 64,000, and federal funding to the district would be $250 million less in 2026 than under current law. In Tom MacArthur's NJ-3 the number of uninsured would increase by 112 percent, to about 77,000,and the annual funding cut by 2026 would exceed $360 million. MacArthur was author of the AHCA amendments allowing states to opt out of ACA protections for people with pre-existing conditions, which secured the support of the Freedom Caucus and enabled passage in the House.

The loss of $28 billion in federal funds over ten years would exacerbate the state's fiscal crisis and result in the loss of about 54,000 jobs, as estimated by NJPP.

Medicaid expansion in reverse

Statewide, about two thirds of the coverage losses triggered by the AHCA would be in Medicaid, resulting from the phaseout of enhanced federal funding for the Affordable Care Act's expansion of Medicaid eligibility to adults with incomes up to 138 percent of the Federal Poverty Level. About 10 percent of New Jersey adults would lose coverage due to repeal of the expansion.

562,000 New Jersey adults are enrolled in Medicaid through the expansion, which means that the federal government pays 90% of their premiums. The AHCA ends the enhanced federal match for new applicants made eligible by the ACA in 2020, reducing the federal match to 50%. Given Medicaid enrollees' frequent "churn" in and out of Medicaid as their income fluctuates, NJPP, following CBO, estimates that 99% of those enrolled in 2020 would not be enrolled by 2026. Most -- about two thirds -- would not be able to find other insurance, according to NJPP.

To maintain the ACA's expanded eligibility for Medicaid without the enhanced federal funding, NJPP estimates that New Jersey would have to spend $9 billion over 7 years -- $600 million in 2020, when many then-current enrollees would still be covered by the 90 percent federal match, and $1.8 billion by 2026, when almost none would.

A private Marketplace unaffordable to many

With the ACA's income-adjusted tax credits for private market coverage replaced by the AHCA's skimpier credits that adjust only for age, premium subsidies would be reduced by $7 billion by 2026, according to NJPP.

The loss of Cost Sharing Reduction subsidies, currently held by 127,000 enrollees in New Jersey's ACA Marketplace, would hit low income enrollees particularly hard. The average Marketplace enrollee's out-of-pocket costs would rise $3,600 under the AHCA, according to analysis by the Center for Budget and Policy Priorities cited by the NJPP report.

With insurers allowed to charge the oldest enrollees five times as much as the youngest adult enrollees under the AHCA, as opposed to the ACA's 3-to-1 ratio, a typical 60 year-old would pay $8,000 more annually for insurance under the AHCA, according to NJPP.

These changes would drive about 100,000 people out of the individual market by NJPP's estimate, while leaving many enrollees underinsured.

Where the worst damage is done
It's worth noting how NJPP report author Raymond Castro presents the hierarchy of damages wrought by the AHCA:

One way or another, this bill would hurt most New Jerseyans: seniors, people with disabilities, children, working families, health providers and ordinary taxpayers. The only way to prevent such widespread pain is for the Senate to reject proposals that:

Effectively end the Medicaid expansion by reducing the matching rate

End the Medicaid program as an entitlement by permanently capping and reducing funding

Replace subsidies for moderate-income Americans with tax credits that offer less or no assistance to those who need it most

Reduce essential benefits and consumer protections

This is basically the inverse of where House Republicans concentrated their passion while hashing out their priorities to get to passage. The Freedom Caucus initially rejected the bill because it left in place the ACA's Essential Health Benefits that all qualified health plans are required to cover, as well as bans on charging more or denying coverage to people with pre-existing conditions. Rep. Tom MacArthur's amendment allowing states to opt out of these protections broke the Freedom Caucus dam, stimulating some showy angst from relative House moderates. Rep Fred Upton, who declared he could not support a bill that left those with pre-existing conditions exposed, then slapped a band-aid on that gunshot wound -- comically inadequate federal funding for opt-out states to establish high risk pools for those subject to medical underwriting.

All this skirmishing served effectively as cover for the bill's devastation of Medicaid, through rollback of the ACA expansion and imposition of per capital caps, which will reduce the federal government's share of Medicaid funding in perpetuity if not repealed. Also obscured: nearly $900 billion in reduced revenue resulting from repeal of ACA taxes and mandates. The revenue losses rendered the Medicaid cuts necessary to meet budget targets.

The Senate seems likely to follow the same pattern, sweetening individual market subsidies and/or slowing down the timeline for Medicaid expansion repeal, and paying for those changes by tightening the per capita caps, reducing the rate of inflation-adjusted increase in the federal contribution. Tightening the caps will increase long-term damage to Medicaid programs currently serving 75 million people -- children, the disabled, nursing home residents, and the low income elderly, as well as low income non-elderly adults. Kudos to Castro for highlighting where the worst damage is concentrated.

About Me

I'm a freelance writer focused mainly on the unfolding drama of Affordable Care Act implementation and health reform more generally.
I have a Ph.D. in medieval English literature and a propensity to parse the rhetoric and logic of our political leaders as well as that of media pundits and scholars who jump into the national debate. I wrote a dissertation on the remarkably humane and subtle medieval English anchorite Julian of Norwich, a mystic nun whose knack of squaring circles and framing paradoxes reminds me a little of our current president. A sampling of that work (mind the google gaps) is here: http://bit.ly/OzwsrR